Alexandria, Va., May 17, 2004 — A new study published by the Graphic Arts Marketing Information Service (GAMIS), provides an inside look at color variable data printing opportunities. While the study points out that color variable data printing may not immediately be poised for explosive growth, there are pockets of success and compelling evidence that these applications can be profitable for printers. Variable Data Imaging Opportunities with Digital Printing Presses was completed in late 2003 by INTERQUEST, Charlottesville, VA. It analyzes the marketplace for transactional and personalized promotional communications, or color variable data printing (CVDP) in North America. The study examines current activities, and provides trend and forecast data through 2007 for key industry sectors. According to the GAMIS study, in the context of the entire $90 billion sales in the printing industry, jobs that incorporate color variable data elements are relatively meager. All pages produced on digital toner and ink jet production systems in monochrome and color account for 10% or less of all print sales, and pages that include full color variable data represent about 10% of that portion or just 1% of the entire printing industry. Factors that affect the overall health of the printing industry—such as the economy and competition for advertising dollars from alternative media—are also dampening the growth of color variable data printing. “Color variable data printing is a difficult and challenging application that requires an unusual level of commitment and resources,” explains Eric Frank, vice president of marketing at KBA and co-chair of the GAMIS study. “There is compelling evidence, both in the survey results of this study and elsewhere, to suggest that the purchase price and operating costs of the equipment is too high and is hindering adoption,” concludes Frank. The study reveals good news for printers willing to commit resources to develop this side of the business -- print providers surveyed for this study forecast a growth of 57% per year in color variable data printing (CVDP) revenue, and buyers expect these types of print purchases will grow 54% annually. To be fair, all of the providers surveyed for this study offer some form of CVDP, and 71% of the buyers surveyed have purchased color variable data printing, so neither group is entirely representative of the general population. Color variable data printing, with a few exceptions, is not a dominant business activity among these providers. It represents about 14.7% of the total revenue of providers surveyed, and less than 5% for more than half of them. Corporate buyers say CVDP represents between 2% to 3% of their print expenditures. More than two-thirds of the print providers surveyed for this study say the profit margin on color variable data jobs is higher than profits on static jobs and black-and-white personalization. The average net profit margin reported by 20% of the printers is 30% to 40%—double their profits on other categories of work. In the GAMIS study, INTERQUEST also looked at the absolute response rate, response rate compared to black-and-white personalization, reduction in cost per response, and increase in sales revenue from 60 CVDP projects. The cost of printing full-color variable data was more than two times higher than the cost to overprint pre-printed shells. But, the average response rate of the projects was 21% higher, and cost per response was 54% lower than traditional direct mail campaigns. The average increase in sales from the CVDP projects was 93%. Many printers involved in CVDP believe the application should be treated as a marketing and communications service. According to these providers, the printing component is not necessarily the source of the greatest added value and profit. Providers report that the key to uncovering CVDP applications is developing a thorough understanding of the business processes and requirements of their customers. They believe this is also the best way to prevent the application from being commoditized, but this is a distinctly different way to approach business for many printers. Some print providers no longer keep and maintain digital equipment but rather subcontract color variable digital printing in order to concentrate solely on marketing and communications activities related to the application. It is unclear at this time whether or not this could become a trend, but it is clear that printers aggressively growing their CVDP business are approaching the market in a different way -- as solution providers. This study is available exclusively through membership in GAMIS. For more information, contact Jackie Bland, GAMIS Executive Director at (703) 519-8179 or by e-mail at [email protected]. Membership details are also found on the web at www.gamis.org. GAMIS is a special interest group of the Printing Industries of America. It is the premier market research association of the graphic arts industry with members from diverse segments of the printing industry.